Insurance Distribution Directive (6)
- By MICHAEL HANSON
- •
- 05 Nov, 2018
YOUR COMPLIANCE MATTERS: Insurance Distribution Directive (6) – Good Repute.
Relevance: All firms.
Action required: Ensure system in place to confirm “Good Repute” requirements
The Insurance Distribution Directive (IDD) has been effective since 01 October 2018.
One aspect of the IDD that all firms need to be aware of is the introduction of rules relating to Good Repute.
The first relevant new rule in this respect states:
“A firm must ensure that all the persons in its management structure and any staff directly involved in insurance distribution activities are of good repute.”
FCA Guidance suggests that this includes but is not limited to those who are:
· directly involved in insurance distribution activities; or
· within the management structure responsible for insurance distribution activities; or
· within the management structure responsible for any staff directly involved in insurance distribution activities.
The next relevant rule states:
“In considering a person’s repute the firm must at a minimum ensure that the person:
1) has a clean criminal record or any other national equivalent in relation to serious criminal offences linked to crimes against property or other crimes related to financial activities; and
2) has not previously been declared bankrupt, unless they have been rehabilitated in accordance with national law.”
Again, there is some FCA Guidance:
· In the UK the following persons will be considered to have been rehabilitated:
o in relation to a serious criminal offence, where the conviction is considered ‘spent’ under the Rehabilitation of Offenders Act 1974,
o in relation to bankruptcy, where the bankruptcy has been discharged.
· References to “serious criminal offences” are not restricted to offences considered to have been committed in or under the law of the UK.
· A firm should give particular consideration to offences of dishonesty, fraud, financial crime or other offences under legislation relating to banking and financial services, companies, insurance and consumer protection.
We already prompt firms to conduct an annual “fitness and propriety” check on all Approved Persons, which should include a signed Declaration from each individual Approved Person giving appropriate answers to a series of relevant questions. We also understand that in addition, some client firms seek to obtain a report from the Disclosure and Disbarring Service (DBS), which has replaced the previous CRB (Criminal Record Bureau) checks, as part of its process to confirm Fitness and Propriety.
Firms will now need to decide how to conduct a similar exercise with all other members of staff.
As a minimum, we would expect that:
· All new employees have a Standard DBS check carried out on them and they are required to complete and sign a “Declaration of Good Repute”, as part of the job offer.
· All existing employees are required to complete and sign a “Declaration of Good Repute”, now and on an annual basis.
· The process for Approved Persons is maintained but set up for review, particularly in view of the forthcoming requirements of the Senior Managers and Certification Regime
We have created a “Declaration of Good Repute” that firms can use, which follows this newsletter.
Useful guidance is available from the DBS website using the following link: https://www.gov.uk/guidance/dbs-check-requests-guidance-for-employers
Finally, whatever you decide to do, you should make sure that the process is included in the firm’s Recruitment Procedure.
If you need to discuss any aspect of this newsletter, please contact us.
Annual Declaration of Good Repute
As a firm authorised and regulated by the Financial Conduct Authority (FCA), we are obliged to follow rules from the FCA’s Handbook, one of which states:
“A firm must ensure that all the persons in its management structure and any staff directly involved in insurance distribution activities are of good repute.”
As an employee, you are required to notify us of any relevant incidents or events, on an ongoing basis. However, on an annual basis, we will require all management and staff to complete this Declaration and return it within the next 7 days to the person responsible for the firm’s Compliance. This form will be placed on your personnel file and will remain confidential.
The firm has an obligation to inform the FCA of any matter that will impact on your ability to continue to be involved in insurance distribution activities. If you answer ‘Yes’ to any of the following questions, you must make immediate contact with the person responsible for the firm’s Compliance for further guidance
| Item |
Yes (ü) |
No (ü) |
| Have you ever been convicted of any criminal offence, whether a spent conviction or not? |
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| Are you currently the subject of any criminal proceedings? |
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| Do you have any County Court judgements against you? |
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| Have you ever failed to satisfy any judgement debt within one year of the making of an order? |
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| Are you or have you been the subject of any civil proceedings, arbitration or litigation that may lead to a County Court Judgement or other judgement against you – in the UK or elsewhere? |
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| Are you aware of any intention to begin such proceedings against you? |
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| Have you been, or are you now, the subject of any bankruptcy proceedings? |
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| Have you ever entered into a deed of arrangement or an individual voluntary arrangement? |
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| Have you ever been the subject of any investigation into allegations of misconduct or malpractice in connection with any business activity? |
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| Have you ever been refused entry or been dismissed or been required to resign from any professional, vocational office or employment, or from any fiduciary office or position of trust? |
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| Have you ever been refused, or had revoked, restricted or terminated, any activity regulated by the FCA? |
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| Have you ever resigned whilst under investigation by, or been required to resign from, any body? |
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| Have you ever been disqualified from acting as a Director of a company or from acting in a management capacity? |
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| Has any company, Partnership or unincorporated association of which you have been a controller, Director, senior manager, Partner or company secretary been: · put into liquidation, wound up, ceased trading or had a receiver appointed? · adjudged by a court to be liable for any fraud, misfeasance, wrongful trading or other misconduct? · investigated or been investigated by an inspector appointed under companies or other legislation? |
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| Are you aware of any business interest or employment obligations that may conflict with the current performance of a controlled function with the firm? |
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| Have you withheld any material information from the firm? |
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Declaration
I confirm that my answers to the above questions are true to the best of my knowledge and belief.
I confirm that I will advise the firm of any changes to the above answers as any issues arise.
| Name |
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Position Held |
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| Signature |
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Date |
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Please note: Personal information provided in this form will only be used to discharge this firm’s statutory functions under the Financial Services and Markets Act 2000 and other relevant legislation and will not be disclosed for any other purpose without your permission.
